Immigration – it’s not going away.

Written by: Gareth Biggerstaff
Published on: 6 Jun 2017

Here are some quotes from an online article I read recently on the subject of the election and the recruitment industry.

“Business leaders regularly ask for one thing and that’s stability. They like to be able to predict what is going to happen next … whether you are personally pleased or not with the election result, it will provide stability, which in turn should mean a platform for further investment, including investment in people … However there are other less stable factors on the horizon which could have a bigger impact … there is the question over the UK’s continued membership of the European Union (which) is always going to have an impact on our industry, from an economic, cultural and regulatory perspective.”

Sounds drearily familiar, doesn’t it?  Yet this was written before the 2015 election, and it doesn’t seem as if much has changed, other than, of course, the impact of British membership, soon to be non-membership, of the European Union.

As to why not much has changed, you’ll have to ask the politicians. To be fair, they are constantly besieged by special interest groups, all with their own particular demands for government action that benefits their specific industry or area of interest.  Recruitment is no different in making its own demands. Witness the REC “manifesto”, launched just a few weeks ago, with its advice on what government needs to do to “build the best jobs market in the world”. 

As it happens, there is a lot to agree with in the REC manifesto, yet we all know that government simply cannot please all the people all of the time. However, REC is not wrong when they state that, amongst other things, the new government needs to:

  • prepare young people for jobs of the future by embedding employability within the school curriculum and aligning the skills market with labour market needs   
  • build a pragmatic post-EU immigration system that reflects the needs of businesses in different sectors and regions
  • simplify the tax system and avoid extending IR35 rules to the private sector  
  • ensure employment regulations reflect modern working practices 
  • work with the recruitment industry to pre-empt how new working relationships with the EU might impact UK jobs  

Furthermore, REC notes that despite record levels of employment, “the next government will face challenges including skills shortages, poor productivity, falling real wages, and uncertainty during Brexit negotiations”.

The problem of skills shortages applies in spades in the IT sector. No government has got this right and I don’t see that changing much in the short to medium term after the election.  Assuming I’m right, that means that we are going to have to continue to get some of the IT talent this country needs from overseas. 

It’s not just me.  In the middle of May, I read a report online that Herman Narula, the co-founder (in 2012) of virtual reality firm, Improbable, which is Britain’s newest unicorn, “has warned that the hi-tech industry would suffer if the government imposes curbs on hiring skilled overseas workers after the UK leaves the European Union”.

In addition, REC director of policy, Tom Hadley, said, “We also need an immigration system which will help not hinder employers as they seek the skills and talent they need”.  

That statement from Mr. Hadley sums up what I believe is an essential outcome of Brexit if it is going to be a success. At present, we can employ people from across the EU without too much difficulty.   That will change after Brexit.  The Immigration Skills Charge is doubling to £2K per annum with the money spent going to train British nationals. Yet you don’t train an IT specialist in five minutes, and we need these people now!

Yes, I know that the Tier 2 visa system will still allow us to hire overseas nationals with the skills that are on the approved government lists, and yes I know that these lists are regularly updated, but while I know that the £2K per annum fee will not deter big businesses, who will consider it a charge worth paying if it solves their IT problems, that doesn’t alter the fact that, despite this, we’ll still be short of the number and quality of IT professionals we need if this country – one of the most powerful economies in the world don’t forget - is to continue to succeed as it should.  Moreover, if we can find a way to attract most of the IT talent we need from the global labour market (as opposed to just the EU), it will also have the effect of perhaps reducing the rate of increase in IT salaries, currently being driven skywards by the immutable laws of supply and demand. That would benefit employers and free up more money for more hires, more investment, more success and, ultimately perhaps help make Brexit more likely to be a success than a failure. 

To that end, a key way of making this happen is to attract students from all over the world, and seek to keep them here to build and develop new businesses – the future unicorns like Herman Narula’s Improbable.  It should be noted that Mr. Narula was born in India and came here with his family when he was only three.  He studied at Cambridge University and set up his firm with a university friend.  Students like him, although usually coming here in their teens and twenties rather than at the age of three, are vital to this country, for the money they bring and spend on fees, services and goods, and also for their potential impact in the future.  Of course the majority of them go back home, but they generally do so with positive impressions and a real like for the UK, whereas if they all get their higher education in India, China and the rest of the growing economic powerhouses it will be those countries that benefit from their educated and entrepreneurial mindsets. 

I’ll finish by reprising that quote from the REC manifesto:

“We need an immigration system which will help not hinder employers as they seek the skills and talent they need”.  Amen.

Gareth Biggerstaff, MD, Be-IT